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FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018
NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS
ATLANTIC CASAULTY INSURANCE
COMPANY,
Index No.: 510798/2018
Plaintiff,
v. REPLY AFFIRMATION IN
FURTHER SUPPORT OF
EASTERN FRUIT & VEGETABLES INC. MOTION
Defendant.
DEBRA M. KREBS, ESQ., an attorney duly admitted to practice law in the courts of the
State of New York, and a partner in the law firm Keidel, Weldon & Cunningham, LLP, counsel
for Plaintiff, Atlantic Casualty Insurance Company (“Atlantic”), hereby affirms the following
under penalties of perjury:
1. As counsel for Atlantic, I am familiar with the facts and circumstances set forth in
this Affirmation.
2. This Affirmation is respectfully submitted in further support of Atlantic’s motion
seeking an order pursuant to CPLR 3126 and, more specifically, is submitted in reply to
Defendant’s opposition to that motion.
ARGUMENT
A. Defendant Concedes it has Refused to Comply with the Court’s Order
1. As to Atlantic’s Document Demands
3. The Court expressly directed Defendant to respond to Atlantic’s document
demands and interrogatories “insofar as seeking documents and materials during the contract
periods, 2016 and 2017…” (see, Exhibit 21 at p. 2). Defendant concedes it has not produced any
1
Exhibits in bolded text refer to exhibits attached to the moving papers.
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such documents, but has only “offered documents from others as its own without reservation….”
(Affirmation in Opposition [NYSCEF 179] at ¶8).
4. Additionally, although the Court expressly advised Defendant to “provide affidavit
of diligent search as to those documents not subject to objection which are not provided in the
responses” (Exhibit 2 at p. 2), Defendant has not produced such affidavit.
5. Defendant waves its hand at this requirement by baldly commenting through
counsel that Defendant was “unable to locate its documents after a diligent good faith search.”
(Affirmation in Opposition [NYSCEF 179] at ¶8). In addition to the fact that this is untimely, this
statement is insufficient. As this Court has explained, an affidavit of diligent inquiry:
must be made by the custodian of records or by such other person duly designated
by law to be a substitute custodian or person charged with the obligation to
preserve, maintain, store and search for said records. At a minimum, this affidavit
must include: (1) official custodian/qualifications of affiant, (2) diligent search
efforts, (3) reason for absence, (4) the chain of custody, (5) last known possessor,
and (6) storage locations. Defense counsel's affirmation here is plainly inadequate.
(Kleinman v Blue Ridge Foods, LLC, 32 Misc 3d 1219[A], 1219A, 2011 NY Slip Op 51363[U],
*16 [Sup Ct, Kings County 2011]). Defendant provides none of this information and makes the
statement through counsel, who lacks personal knowledge. It is also respectfully submitted that,
particularly in a case such as the present, Defendant should be required to specify when a search
was made, by whom such search was made and what records were searched. This information has
not been provided either. As such, Defendant has failed to comply with the Court’s order.
6. It should also be noted that this claim was not made until after two motions seeking
such documents and two orders compelling their production.
7. Furthermore, even if Defendant had provided an affidavit of diligent inquiry, it
would be insufficient because the documents are clearly within Defendant’s “custody.”
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8. Defendant argues that its claimed inability to locate the documents “is somewhat
moot since almost all of the documents in question were generated by entities that are not the
defendant and that the defendant would just be a receiving receptacle at best.” (Affirmation in
Opposition [NYSCEF 179] at ¶8). Of course, CPLR 3120(1)(i) is not limited to documents which
a party has itself prepared, but permits discovery of documents “in the possession, custody or
control of the party or person served….” “Documents under a party's ‘control’ within the use of
that term in CPLR 3120 include documents as to which the party has ‘the legal right, authority, or
ability to obtain upon demand documents in the possession of another.’ (Citations omitted).”
(Richard v Kerwin, 53 Misc 3d 1213[A], 2016 NY Slip Op 51639[U], *2 [Sup Ct, Monroe County
2016]). The Court of Appeals has explained:
As these sections of the CPLR indicate, in a documentary discovery context, with
expansive rules of disclosure, it is reasonable to conclude that the legislature would
employ a broader ‘possession, custody or control’ standard. Indeed, various courts
have interpreted ‘possession, custody or control’ to allow for discovery from parties
that had practical ability to request from, or influence, another party with the
desired discovery documents. As such, courts have interpreted ‘possession,
custody or control" to mean constructive possession’ (citations omitted).
Commonwealth of the N. Mariana Is. v. Canadian Imperial Bank of Commerce, 21 N.Y.3d 55, 62
(2013). If there are other entities who prepared the documents for Defendant, as Defendant claims,
presumably these entities are within Defendant’s control and Defendant is required to obtain the
documents from such entities to produce.
9. Atlantic’s demands seek documents relating to Defendant’s receipt of the subject
insurance policy, Defendant’s receipt of documents regarding the audit premium, Defendant’s
receipt of documents regarding Defendant’s failure to pay the audit premium and the financial
records Defendant produced to Atlantic’s auditor. Certainly, Defendant should be in possession
of these documents. To the extent Defendant may be claiming that its financial records are in the
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possession of others, it would seem the other persons might be financial consultants and/or
accountants over whom Defendant has control. To the extent the demand seeks copies of
Defendant’s tax returns, the courts have explained that “a party is deemed to have control of
documents filed with a federal agency as to which the party has or can obtain copies. (citations
omitted).” (Richard, 2016 NY Slip Op 51639[U], *3). Since Defendant’s tax returns are filed
with the IRS, Defendant can obtain copies from the IRS or provide Atlantic with an authorization.
As such, the fact that Defendant is unable to locate these documents is an insufficient excuse.
10. Defendant further argues that it “has a new manager.” Affirmation in Opposition
[NYSCEF 179] at ¶8. This argument is not only insufficient, its relevance is unclear. It appears
Asif Jhangir still owns the Defendant corporation, since no claim is made to the contrary. Mr.
Jhangir is the person who previously submitted an affidavit regarding this matter. See, Prior
Motion, Exhibit 2, at Exhibit S. Additionally, according to the audit report, “President is Asif
Jhangir. He oversees day to day operations. He also oversees administrative and fiscal matters.”
See, Audit Report, Exhibit 9 at p. 1. As a result, it would appear that Mr. Jhangir is the person
who would have access to the documents relevant to this matter and/or who would be able to obtain
such documents from any accountant or other person who may have the same. It is, therefore,
irrelevant that, at some unspecified point in time, Defendant hired a new manager.
11. It should also be noted that the Court’s order provided Defendant with two months
to respond to Atlantic’s demands and interrogatories (which had been served in October 2019).
Thereafter, the undersigned contacted Defendant’s counsel for several weeks to obtain proper
responses. Defendant’s opposition claiming the existence of a new manager was filed three and a
half months after the Court’s order compelling such responses. Regardless of when during that
period of time Defendant hired a new manager (who may well be in addition to any existing
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manager), Defendant still had more than sufficient time to respond to the demands. Moreover, it
is noteworthy that, although we reached out to Defendant’s counsel several times and spoke with
him on one of those occasions, Defendant did not ask for an extension of time to respond. Instead,
Defendant smugly responded with the same responses as those previously provided. This
punctuates Defendant’s willful and contumacious conduct.
12. Since Defendant continues in its failure to respond to Atlantic’s discovery demands,
and since it is clear that Defendant’s refusal to comply with the Court’s order is willful and
contumacious, it is respectfully submitted Defendant’s answer should be stricken or, alternatively,
an appropriate preclusion order should be issued.
2. As to Atlantic’s Interrogatories
13. As discussed in support of this motion, Atlantic also served Defendant with
interrogatories. Even if Defendant has lost or spoliated its documents, it should nonetheless be
required to respond to Atlantic’s interrogatories, including the interrogatories seeking to identify
persons with knowledge and who might be potential witnesses and seeking to identify the bases of
Defendant’s affirmative defenses. Although none of these even require reference to any
documents, Defendant has failed to explain why it has not made any effort to respond.
14. Since Defendant continues in its failure to respond to Atlantic’s interrogatories, and
since it is clear that Defendant’s refusal to comply with the Court’s order is willful and
contumacious, it is respectfully submitted Defendant’s answer should be stricken or, alternatively,
an appropriate preclusion order should be issued.
B. Defendant’s Objections
15. As discussed in support of the within motion, Defendant’s more recent responses
objected to two of Atlantic’s document demands on the basis of privilege. We explained in support
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of this motion that such privilege assertions are not only belated, but are unsupported. Defendant
does not refute these arguments. As a result, such defenses should be stricken.
C. Defendant’s Objection Regarding Tax Returns
16. Defendant previously cross-moved for a protective order seeking to avoid
responding to Atlantic’s demands. See, [NYSCEF 145]. In addition to seeking to avoid all of
Atlantic’s demands, the motion specifically argued privilege. See, Affirmation [NYSCEF 146] at
¶¶9-13. Since the only privilege objection which had been asserted at that time was to paragraph
15, which seeks disclosure of Defendant’s tax returns (see, Response, attached as part of Exhibit
1, at ¶2), and since the prior motion by Atlantic sought to compel production of the tax returns
(among other things), the Court’s prior order, which compels production of the 2016 and 2017 tax
returns (Exhibit 2), apparently already determined that Atlantic made the requisite showing of
entitlement to those returns. If Defendant intended to challenge such determination, Defendant
was required to file a motion for reargument or a notice of appeal, neither of which were done. As
a result, such finding is now law of the case and cannot be challenged.
17. It should also be noted that, until Defendant’s opposition to this motion, its only
objection to production of tax returns was based upon a claimed privilege. Defendant’s new
objection, claiming that Atlantic has not made a “strong showing that the information is
indispensable to the claim and cannot be obtained from other sources” (Affirmation in Opposition
[NYSCEF 179] at ¶12), was not timely asserted pursuant to CPLR 3122 and was waived since
Defendant twice responded to Atlantic’s demands without raising such objection. Such objection
should, therefore, be rejected on this basis as well.
18. Moreover, since Defendant has not responded to other demands and interrogatories,
the Court should either strike Defendant’s answer or, at a minimum, issue a preclusion order which
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should, among other things, preclude Defendant from contesting the amount of the premiums at
issue in this lawsuit (since Defendant also did not provide copies of the documents previously
provided to Atlantic’s auditor and/or gross receipts, neither of which is contested herein). If such
an order issue, the tax returns are irrelevant and the Court need not address Defendant’s objection.
19. Nonetheless, even if the Court does reach this issue, it is respectfully submitted that
Atlantic has made the required showing to support entitlement to such documents.
20. The reason discovery of tax returns is disfavored is because they are “of a
confidential and private nature” and should not be produced when they are not relevant to the case.
(See, Muller v Sorensen, 138 AD2d 683, 684 [2d Dept 1988]). Here, however, the tax returns
were already previously presented to Atlantic’s auditor2 and, therefore, any concerns of
confidentiality are academic.
21. Courts routinely find that tax returns should be produced where a party requires
such document to address a relevant issue. (See, e.g., Levine v City Med. Assoc., P.C., 108 AD3d
746, 747 [2d Dept 2013]; Kay v Kay, 223 AD2d 684, 684 [2d Dept 1996]; Kornblatt v Jaguar
Cars, Inc., 172 AD2d 590, 591 [2d Dept 1991]; Matter of Metro. Transp. Auth., 81 AD3d 434, 435
[1st Dept 2011]; Konrad v 136 E. 64th St. Corp., 235 AD2d 258, 258 [1st Dept 1997]).
22. Defendant cites to Altidor v State-Wide Ins. Co., 22 AD3d 435 [2d Dept 2005] in
support its argument. The facts of that case are discussed in this Court’s decision, Altidor v State-
Wide Ins. Co., 4 Misc 3d 1007[A], 1007A, 2004 NY Slip Op 50753[U] [Sup Ct, Kings County
2
One of the conditions contained in the subject insurance policies is that “[w]e may examine … your books and
records as they relate to this policy at any time during the policy period and up to three years afterward.”
See, 2016
Policy [NYSCEF 58] at ACIC0009; 2017 Policy [NYSCEF 59] at ACIC0072. The 2017 policy was cancelled
effective October 3, 2017. Defendant was contractually required to produce those documents in response to Atlantic’s
discovery demands served on October 28, 2019 – two years after the policy terminated. Accordingly, any
confidentiality concerns normally present are academic.
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2004]. In Altidor, plaintiff claimed its automobile was stolen and filed a claim with State-Wide.
When State-Wide examined the vehicle, itdid not find evidence of forced entry. It,therefore,
denied coverage, alleging fraud. In the resulting lawsuit seeking to compel coverage, State-Wide
sought the insured’s tax returns. This Court recognized that, although tax returns are discoverable
where there is “indicia of fraud,” State-Wide’s generalized claims of fraud were insufficient, and
“[n]o mention is made in the defendant’s memorandum of law stating that discovery of the
plaintiff’s tax records and bank statements is its sole remedy in proving its case.” Id. at *3. In
other words, the tax returns were not directly relevant to the issues and were not needed to address
the issue for which they were sought.
23. Defendant also cites to Briand Parenteau Inc. v Dean Witter Reynolds Inc., 267
AD2d 576, 577 [3d Dept 1999]. In that case, the plaintiff alleged that defendant fraudulently
induced plaintiff to invest in a mutual fund. Defendant sought to obtain plaintiff’s tax returns in
discovery, arguing that they would reveal plaintiff’s financial circumstances, investment
experience and sophistication level, which would address whether plaintiff had justifiably relied
on defendant’s representations. The court refused to permit such disclosure because these issues
could be demonstrated through other means. Although not specifically referenced in its decision,
it is clear that Defendant could have obtained information about Defendant’s investment
experience and sophistication level through testimony or other financial documents.
24. In other words, in each of those cases, the parties could use other documents to
reach their intended goal. That is not the case in the present matter.
25. Here, Atlantic has demonstrated that Defendant is contesting the amount of
premiums owed to Atlantic – a central issue in this case. See, Jhangir Affidavit, annexed as part
of Exhibit 5, at ¶8. Atlantic further demonstrated that the premiums were calculated based upon
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Defendant’s earnings. See, Parrish Affidavit, annexed as part of Exhibit 5 at ¶¶29-33. Atlantic
further demonstrated that the premium charged at the beginning of each policy was based upon
estimated earnings, and that the policy permitted Atlantic to conduct an audit. Id. at ¶31. Atlantic
further demonstrated that such audit was, in fact, conducted. Id. at ¶32; see also, Audit Report
(Exhibit 9). Most importantly, Atlantic has demonstrated that the audit itself was based upon
Defendant’s gross receipts and tax returns. See, Exhibit 9.
26. Since the audit was based upon Defendant’s tax returns and gross receipts, in order
for Atlantic to properly recreate the audit report’s results, Atlantic requires Defendant’s tax returns
and gross receipts. Notably, it would be impossible for Atlantic to determine solely through the
receipts themselves whether they are complete – Atlantic would need the tax returns to confirm
this. Since this information is necessary for Atlantic to refute Defendant’s argument that the
audited premiums should be lower, it is respectfully submitted that, unlike in the cases cited by
Defendant, the tax returns are indispensable to the present case.
27. In light of the above, it is respectfully submitted that the Court was correct in
previously ordering Defendant to produce such documents and that Defendant’s failure to do so
was willful and contumacious. As a result, Atlantic’s motion should be granted.
DEFENDANT’S OTHER ARGUMENTS
28. Defendant raises a number of other arguments which are wholly irrelevant to the
present motion, which is solely and exclusively a discovery motion.
29. The most ironic of Defendant’s arguments is that “defendant’s failure to plead [a]
defense does not waive it.” Affirmation in Opposition [NYSCEF 179 at ¶6]. Although that is not
relevant to the present motion, it refutes Defendant’s own argument raised in its opposition to
Atlantic’s prior discovery motion. In particular, Atlantic had argued that Defendant’s subsequent
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insurance policy is relevant because Defendant’s principal argued “defendant does not believe that
we owe as much as the plaintiff alleges. Following the cancellation of the plaintiff’s policy, the
defendant obtained a new commercial general liability insurance, not subject to audit with
substantially similar policy coverage, with an annual premium of approximately $7,000.00.”
Jhangir Affidavit, annexed as part of Exhibit 2 at ¶8. Despite this, Defendant argued in its prior
cross-motion for protective order that this document is not relevant because no defense was
asserted on this basis. Affirmation in Opposition [NYSCEF 164] at ¶16. Consistent with
Defendant’s disingenuous assertion of arguments, it appears that, despite its prior argument,
Defendant now seeks to preserve its right to assert defenses which have not been raised.
30. Defendant also argues that “Plaintiff has all the documents to make out a prima
facie case and fails to make any distinction of the need for more to make a persuasive case….”
Affirmation in Opposition [NYSCEF 179] at ¶9. It appears that Defendant raises this argument to
claim that some portion of the information or documents Atlantic seeks in discovery is not material
and necessary to this matter. In addition to the fact that this Court already found the materials at
issue to be material and necessary, Defendant has failed to present any case law limiting discovery
to only those documents required by a plaintiff to establish a prima facie case. To the contrary, as
discussed in support of this motion, the rules permit discovery of documents needed to address
Defendant’s defenses. Since Atlantic has demonstrated that the information sought is relevant to
Defendant’s defenses, it is respectfully submitted that the Court correctly determined in response
to the prior motion that such information and documents are relevant. It is further respectfully
submitted that the present motion has also re-made that showing.
31. Defendant also argues that Atlantic fails to allege corporate status and asserts other
allegations challenging the sufficiency of Atlantic’s pleadings and Atlantic’s standing to maintain
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this lawsuit. However, since this is not a motion to dismiss (and, in fact, there is a separate motion
to dismiss currently pending in which these issues are being addressed), the present motion is not
the proper forum for those issues to be decided. Nonetheless, to the extent the Court may be
inclined to address them, we refer the Court to [NYSCEF 85-121] refuting these arguments.
32. Defendant argues in bold lettering that Atlantic has not attached a copy of the
subject insurance policies. However, the present motion is not a dispositive motion – Atlantic is
not required to prove its case. Atlantic presented the affidavit of Suzanne Parrish in which she
explains that the policies contain premium audit provisions and that the premiums at issue are audit
premiums required under the policies. See, Parrish Affidavit, annexed as part of Exhibit 5 at ¶¶29-
33. Although Atlantic is not required to produce copies of the policies in connection with a
discovery motion, particularly since the Court already previously found the documents to be
relevant, nonetheless, copies were previously filed at [NYSCEF 58 and 59], which are
incorporated herein by reference.
33. Defendant argues that “Plaintiff conflates initial premiums that are fully paid with
premium audit endorsement language and contract provisions that plaintiff fails to plead.”
Affirmation in Opposition [NYSCEF 179] at ¶4. Although the Complaint does not specify that
the premiums sought were required as a result of an audit, the Complaint alleges that “the unpaid
principal balance due on policy L146001424-1 is $69,903.09 [and t]he unpaid principal balance
due on policy L146002524-2 is $23,238.00.” Complaint, annexed as part of Exhibit 1 at THIRD.
The standard in New York is liberal notice pleading. (Artis v Random House, Inc., 34 Misc 3d
858, 866 [Sup Ct, NY County 2011]). The pleadings sufficiently allege Atlantic’s right to recover
unpaid premiums. The fact that Atlantic does not specify in the complaint that the premiums were
determined based upon an audit is irrelevant. As discussed above, for purposes of demonstrating
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that documents relating to the audit, including Defendant’s financial records, are relevant to this
lawsuit, Atlantic has attached the affidavit of Suzanne Parrish (Exhibit 1 at Exhibit O).
34. Since none of the arguments provide any basis for this Court to set aside its prior
order compelling Defendant’s production, and since none of these arguments provide any reason
for Defendant’s failure to comply with the Court’s order, it is respectfully submitted that this Court
should grant Atlantic’s motion.
APPROPRIATE REMEDY
35. Defendant does not refute that it has willfully failed and refused to comply with the
Court’s order. Nor does Defendant refute that striking its pleading is the appropriate remedy.
36. The content of Defendant’s opposition demonstrates that, no matter how many
orders this Court might issue compelling Defendant’s production, Defendant will continue in its
refusal to comply.
37. In light of this, and since Defendant has provided none of the information or
documents requested in this matter (save for one interrogatory response which Defendant contends
is irrelevant), it is respectfully submitted that the appropriate remedy is to strike Defendant’s
answer.
38. At a minimum, it is respectfully requested that this court preclude Defendant from
denying Atlantic Casualty’s claims and/or preclude Defendant from contesting the fact that
Defendant owes premiums, the amount sought, Defendant’s notice of the premiums, Defendant’s
notice of the fact that the premiums remain outstanding and Plaintiff’s entitlement to the premiums
sought herein.
WHEREFORE, it is respectfully requested that this Court grant the within motion, together
with such other and further relief as this Court deems just, equitable and proper.
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Dated: White Plains, New York
February 22, 2021
Keidel, Weldon & Cunningham, LLP
By: ________________________________
Debra M. Krebs, Esq.
Attorneys for Plaintiff
Atlantic Casualty Insurance Co.
925 Westchester Avenue, Suite 400
White Plains, New York 10604
Tel: (914) 948-7000
Fax: (914) 948-7010
TO: L. Blake Morris, Esq.
L. Blake Morris & Associates
Attorneys for Defendant
Eastern Fruit & Vegetables, Inc.
1214 Cortelyou Road
Brooklyn, New York 11218
Tel: (718) 826-8401
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WORD COUNT CERTIFICATION
I hereby certify pursuant to 22 NYCRR 202.8-b that the total number of words in the
foregoing Reply Affirmation in Further Support of Motion, inclusive of point headings and
footnotes and exclusive of caption, signature blocks, and pages containing the table of contents,
table of citations and this Statement is 3,726, which is in compliance with NYCRR 202.8-b.
Dated: White Plains, New York
February 22, 2021
KEIDEL, WELDON & CUNNINGHAM, LLP
By:
Debra M. Krebs, Esq.
Robert W. Lewis, Esq.
Attorneys for Plaintiff
Atlantic Casualty Insurance Company
925 Westchester Avenue, Suite 400
White Plains, New York 10604
(914) 948-7000
Preview
FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS ATLANTIC CASAULTY INSURANCE COMPANY, Index No.: 510798/2018 Plaintiff, v. REPLY AFFIRMATION IN FURTHER SUPPORT OF EASTERN FRUIT & VEGETABLES INC. MOTION Defendant. DEBRA M. KREBS, ESQ., an attorney duly admitted to practice law in the courts of the State of New York, and a partner in the law firm Keidel, Weldon & Cunningham, LLP, counsel for Plaintiff, Atlantic Casualty Insurance Company (“Atlantic”), hereby affirms the following under penalties of perjury: 1. As counsel for Atlantic, I am familiar with the facts and circumstances set forth in this Affirmation. 2. This Affirmation is respectfully submitted in further support of Atlantic’s motion seeking an order pursuant to CPLR 3126 and, more specifically, is submitted in reply to Defendant’s opposition to that motion. ARGUMENT A. Defendant Concedes it has Refused to Comply with the Court’s Order 1. As to Atlantic’s Document Demands 3. The Court expressly directed Defendant to respond to Atlantic’s document demands and interrogatories “insofar as seeking documents and materials during the contract periods, 2016 and 2017…” (see, Exhibit 21 at p. 2). Defendant concedes it has not produced any 1 Exhibits in bolded text refer to exhibits attached to the moving papers. 1 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 such documents, but has only “offered documents from others as its own without reservation….” (Affirmation in Opposition [NYSCEF 179] at ¶8). 4. Additionally, although the Court expressly advised Defendant to “provide affidavit of diligent search as to those documents not subject to objection which are not provided in the responses” (Exhibit 2 at p. 2), Defendant has not produced such affidavit. 5. Defendant waves its hand at this requirement by baldly commenting through counsel that Defendant was “unable to locate its documents after a diligent good faith search.” (Affirmation in Opposition [NYSCEF 179] at ¶8). In addition to the fact that this is untimely, this statement is insufficient. As this Court has explained, an affidavit of diligent inquiry: must be made by the custodian of records or by such other person duly designated by law to be a substitute custodian or person charged with the obligation to preserve, maintain, store and search for said records. At a minimum, this affidavit must include: (1) official custodian/qualifications of affiant, (2) diligent search efforts, (3) reason for absence, (4) the chain of custody, (5) last known possessor, and (6) storage locations. Defense counsel's affirmation here is plainly inadequate. (Kleinman v Blue Ridge Foods, LLC, 32 Misc 3d 1219[A], 1219A, 2011 NY Slip Op 51363[U], *16 [Sup Ct, Kings County 2011]). Defendant provides none of this information and makes the statement through counsel, who lacks personal knowledge. It is also respectfully submitted that, particularly in a case such as the present, Defendant should be required to specify when a search was made, by whom such search was made and what records were searched. This information has not been provided either. As such, Defendant has failed to comply with the Court’s order. 6. It should also be noted that this claim was not made until after two motions seeking such documents and two orders compelling their production. 7. Furthermore, even if Defendant had provided an affidavit of diligent inquiry, it would be insufficient because the documents are clearly within Defendant’s “custody.” 2 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 8. Defendant argues that its claimed inability to locate the documents “is somewhat moot since almost all of the documents in question were generated by entities that are not the defendant and that the defendant would just be a receiving receptacle at best.” (Affirmation in Opposition [NYSCEF 179] at ¶8). Of course, CPLR 3120(1)(i) is not limited to documents which a party has itself prepared, but permits discovery of documents “in the possession, custody or control of the party or person served….” “Documents under a party's ‘control’ within the use of that term in CPLR 3120 include documents as to which the party has ‘the legal right, authority, or ability to obtain upon demand documents in the possession of another.’ (Citations omitted).” (Richard v Kerwin, 53 Misc 3d 1213[A], 2016 NY Slip Op 51639[U], *2 [Sup Ct, Monroe County 2016]). The Court of Appeals has explained: As these sections of the CPLR indicate, in a documentary discovery context, with expansive rules of disclosure, it is reasonable to conclude that the legislature would employ a broader ‘possession, custody or control’ standard. Indeed, various courts have interpreted ‘possession, custody or control’ to allow for discovery from parties that had practical ability to request from, or influence, another party with the desired discovery documents. As such, courts have interpreted ‘possession, custody or control" to mean constructive possession’ (citations omitted). Commonwealth of the N. Mariana Is. v. Canadian Imperial Bank of Commerce, 21 N.Y.3d 55, 62 (2013). If there are other entities who prepared the documents for Defendant, as Defendant claims, presumably these entities are within Defendant’s control and Defendant is required to obtain the documents from such entities to produce. 9. Atlantic’s demands seek documents relating to Defendant’s receipt of the subject insurance policy, Defendant’s receipt of documents regarding the audit premium, Defendant’s receipt of documents regarding Defendant’s failure to pay the audit premium and the financial records Defendant produced to Atlantic’s auditor. Certainly, Defendant should be in possession of these documents. To the extent Defendant may be claiming that its financial records are in the 3 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 possession of others, it would seem the other persons might be financial consultants and/or accountants over whom Defendant has control. To the extent the demand seeks copies of Defendant’s tax returns, the courts have explained that “a party is deemed to have control of documents filed with a federal agency as to which the party has or can obtain copies. (citations omitted).” (Richard, 2016 NY Slip Op 51639[U], *3). Since Defendant’s tax returns are filed with the IRS, Defendant can obtain copies from the IRS or provide Atlantic with an authorization. As such, the fact that Defendant is unable to locate these documents is an insufficient excuse. 10. Defendant further argues that it “has a new manager.” Affirmation in Opposition [NYSCEF 179] at ¶8. This argument is not only insufficient, its relevance is unclear. It appears Asif Jhangir still owns the Defendant corporation, since no claim is made to the contrary. Mr. Jhangir is the person who previously submitted an affidavit regarding this matter. See, Prior Motion, Exhibit 2, at Exhibit S. Additionally, according to the audit report, “President is Asif Jhangir. He oversees day to day operations. He also oversees administrative and fiscal matters.” See, Audit Report, Exhibit 9 at p. 1. As a result, it would appear that Mr. Jhangir is the person who would have access to the documents relevant to this matter and/or who would be able to obtain such documents from any accountant or other person who may have the same. It is, therefore, irrelevant that, at some unspecified point in time, Defendant hired a new manager. 11. It should also be noted that the Court’s order provided Defendant with two months to respond to Atlantic’s demands and interrogatories (which had been served in October 2019). Thereafter, the undersigned contacted Defendant’s counsel for several weeks to obtain proper responses. Defendant’s opposition claiming the existence of a new manager was filed three and a half months after the Court’s order compelling such responses. Regardless of when during that period of time Defendant hired a new manager (who may well be in addition to any existing 4 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 manager), Defendant still had more than sufficient time to respond to the demands. Moreover, it is noteworthy that, although we reached out to Defendant’s counsel several times and spoke with him on one of those occasions, Defendant did not ask for an extension of time to respond. Instead, Defendant smugly responded with the same responses as those previously provided. This punctuates Defendant’s willful and contumacious conduct. 12. Since Defendant continues in its failure to respond to Atlantic’s discovery demands, and since it is clear that Defendant’s refusal to comply with the Court’s order is willful and contumacious, it is respectfully submitted Defendant’s answer should be stricken or, alternatively, an appropriate preclusion order should be issued. 2. As to Atlantic’s Interrogatories 13. As discussed in support of this motion, Atlantic also served Defendant with interrogatories. Even if Defendant has lost or spoliated its documents, it should nonetheless be required to respond to Atlantic’s interrogatories, including the interrogatories seeking to identify persons with knowledge and who might be potential witnesses and seeking to identify the bases of Defendant’s affirmative defenses. Although none of these even require reference to any documents, Defendant has failed to explain why it has not made any effort to respond. 14. Since Defendant continues in its failure to respond to Atlantic’s interrogatories, and since it is clear that Defendant’s refusal to comply with the Court’s order is willful and contumacious, it is respectfully submitted Defendant’s answer should be stricken or, alternatively, an appropriate preclusion order should be issued. B. Defendant’s Objections 15. As discussed in support of the within motion, Defendant’s more recent responses objected to two of Atlantic’s document demands on the basis of privilege. We explained in support 5 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 of this motion that such privilege assertions are not only belated, but are unsupported. Defendant does not refute these arguments. As a result, such defenses should be stricken. C. Defendant’s Objection Regarding Tax Returns 16. Defendant previously cross-moved for a protective order seeking to avoid responding to Atlantic’s demands. See, [NYSCEF 145]. In addition to seeking to avoid all of Atlantic’s demands, the motion specifically argued privilege. See, Affirmation [NYSCEF 146] at ¶¶9-13. Since the only privilege objection which had been asserted at that time was to paragraph 15, which seeks disclosure of Defendant’s tax returns (see, Response, attached as part of Exhibit 1, at ¶2), and since the prior motion by Atlantic sought to compel production of the tax returns (among other things), the Court’s prior order, which compels production of the 2016 and 2017 tax returns (Exhibit 2), apparently already determined that Atlantic made the requisite showing of entitlement to those returns. If Defendant intended to challenge such determination, Defendant was required to file a motion for reargument or a notice of appeal, neither of which were done. As a result, such finding is now law of the case and cannot be challenged. 17. It should also be noted that, until Defendant’s opposition to this motion, its only objection to production of tax returns was based upon a claimed privilege. Defendant’s new objection, claiming that Atlantic has not made a “strong showing that the information is indispensable to the claim and cannot be obtained from other sources” (Affirmation in Opposition [NYSCEF 179] at ¶12), was not timely asserted pursuant to CPLR 3122 and was waived since Defendant twice responded to Atlantic’s demands without raising such objection. Such objection should, therefore, be rejected on this basis as well. 18. Moreover, since Defendant has not responded to other demands and interrogatories, the Court should either strike Defendant’s answer or, at a minimum, issue a preclusion order which 6 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 should, among other things, preclude Defendant from contesting the amount of the premiums at issue in this lawsuit (since Defendant also did not provide copies of the documents previously provided to Atlantic’s auditor and/or gross receipts, neither of which is contested herein). If such an order issue, the tax returns are irrelevant and the Court need not address Defendant’s objection. 19. Nonetheless, even if the Court does reach this issue, it is respectfully submitted that Atlantic has made the required showing to support entitlement to such documents. 20. The reason discovery of tax returns is disfavored is because they are “of a confidential and private nature” and should not be produced when they are not relevant to the case. (See, Muller v Sorensen, 138 AD2d 683, 684 [2d Dept 1988]). Here, however, the tax returns were already previously presented to Atlantic’s auditor2 and, therefore, any concerns of confidentiality are academic. 21. Courts routinely find that tax returns should be produced where a party requires such document to address a relevant issue. (See, e.g., Levine v City Med. Assoc., P.C., 108 AD3d 746, 747 [2d Dept 2013]; Kay v Kay, 223 AD2d 684, 684 [2d Dept 1996]; Kornblatt v Jaguar Cars, Inc., 172 AD2d 590, 591 [2d Dept 1991]; Matter of Metro. Transp. Auth., 81 AD3d 434, 435 [1st Dept 2011]; Konrad v 136 E. 64th St. Corp., 235 AD2d 258, 258 [1st Dept 1997]). 22. Defendant cites to Altidor v State-Wide Ins. Co., 22 AD3d 435 [2d Dept 2005] in support its argument. The facts of that case are discussed in this Court’s decision, Altidor v State- Wide Ins. Co., 4 Misc 3d 1007[A], 1007A, 2004 NY Slip Op 50753[U] [Sup Ct, Kings County 2 One of the conditions contained in the subject insurance policies is that “[w]e may examine … your books and records as they relate to this policy at any time during the policy period and up to three years afterward.” See, 2016 Policy [NYSCEF 58] at ACIC0009; 2017 Policy [NYSCEF 59] at ACIC0072. The 2017 policy was cancelled effective October 3, 2017. Defendant was contractually required to produce those documents in response to Atlantic’s discovery demands served on October 28, 2019 – two years after the policy terminated. Accordingly, any confidentiality concerns normally present are academic. 7 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 2004]. In Altidor, plaintiff claimed its automobile was stolen and filed a claim with State-Wide. When State-Wide examined the vehicle, itdid not find evidence of forced entry. It,therefore, denied coverage, alleging fraud. In the resulting lawsuit seeking to compel coverage, State-Wide sought the insured’s tax returns. This Court recognized that, although tax returns are discoverable where there is “indicia of fraud,” State-Wide’s generalized claims of fraud were insufficient, and “[n]o mention is made in the defendant’s memorandum of law stating that discovery of the plaintiff’s tax records and bank statements is its sole remedy in proving its case.” Id. at *3. In other words, the tax returns were not directly relevant to the issues and were not needed to address the issue for which they were sought. 23. Defendant also cites to Briand Parenteau Inc. v Dean Witter Reynolds Inc., 267 AD2d 576, 577 [3d Dept 1999]. In that case, the plaintiff alleged that defendant fraudulently induced plaintiff to invest in a mutual fund. Defendant sought to obtain plaintiff’s tax returns in discovery, arguing that they would reveal plaintiff’s financial circumstances, investment experience and sophistication level, which would address whether plaintiff had justifiably relied on defendant’s representations. The court refused to permit such disclosure because these issues could be demonstrated through other means. Although not specifically referenced in its decision, it is clear that Defendant could have obtained information about Defendant’s investment experience and sophistication level through testimony or other financial documents. 24. In other words, in each of those cases, the parties could use other documents to reach their intended goal. That is not the case in the present matter. 25. Here, Atlantic has demonstrated that Defendant is contesting the amount of premiums owed to Atlantic – a central issue in this case. See, Jhangir Affidavit, annexed as part of Exhibit 5, at ¶8. Atlantic further demonstrated that the premiums were calculated based upon 8 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 Defendant’s earnings. See, Parrish Affidavit, annexed as part of Exhibit 5 at ¶¶29-33. Atlantic further demonstrated that the premium charged at the beginning of each policy was based upon estimated earnings, and that the policy permitted Atlantic to conduct an audit. Id. at ¶31. Atlantic further demonstrated that such audit was, in fact, conducted. Id. at ¶32; see also, Audit Report (Exhibit 9). Most importantly, Atlantic has demonstrated that the audit itself was based upon Defendant’s gross receipts and tax returns. See, Exhibit 9. 26. Since the audit was based upon Defendant’s tax returns and gross receipts, in order for Atlantic to properly recreate the audit report’s results, Atlantic requires Defendant’s tax returns and gross receipts. Notably, it would be impossible for Atlantic to determine solely through the receipts themselves whether they are complete – Atlantic would need the tax returns to confirm this. Since this information is necessary for Atlantic to refute Defendant’s argument that the audited premiums should be lower, it is respectfully submitted that, unlike in the cases cited by Defendant, the tax returns are indispensable to the present case. 27. In light of the above, it is respectfully submitted that the Court was correct in previously ordering Defendant to produce such documents and that Defendant’s failure to do so was willful and contumacious. As a result, Atlantic’s motion should be granted. DEFENDANT’S OTHER ARGUMENTS 28. Defendant raises a number of other arguments which are wholly irrelevant to the present motion, which is solely and exclusively a discovery motion. 29. The most ironic of Defendant’s arguments is that “defendant’s failure to plead [a] defense does not waive it.” Affirmation in Opposition [NYSCEF 179 at ¶6]. Although that is not relevant to the present motion, it refutes Defendant’s own argument raised in its opposition to Atlantic’s prior discovery motion. In particular, Atlantic had argued that Defendant’s subsequent 9 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 insurance policy is relevant because Defendant’s principal argued “defendant does not believe that we owe as much as the plaintiff alleges. Following the cancellation of the plaintiff’s policy, the defendant obtained a new commercial general liability insurance, not subject to audit with substantially similar policy coverage, with an annual premium of approximately $7,000.00.” Jhangir Affidavit, annexed as part of Exhibit 2 at ¶8. Despite this, Defendant argued in its prior cross-motion for protective order that this document is not relevant because no defense was asserted on this basis. Affirmation in Opposition [NYSCEF 164] at ¶16. Consistent with Defendant’s disingenuous assertion of arguments, it appears that, despite its prior argument, Defendant now seeks to preserve its right to assert defenses which have not been raised. 30. Defendant also argues that “Plaintiff has all the documents to make out a prima facie case and fails to make any distinction of the need for more to make a persuasive case….” Affirmation in Opposition [NYSCEF 179] at ¶9. It appears that Defendant raises this argument to claim that some portion of the information or documents Atlantic seeks in discovery is not material and necessary to this matter. In addition to the fact that this Court already found the materials at issue to be material and necessary, Defendant has failed to present any case law limiting discovery to only those documents required by a plaintiff to establish a prima facie case. To the contrary, as discussed in support of this motion, the rules permit discovery of documents needed to address Defendant’s defenses. Since Atlantic has demonstrated that the information sought is relevant to Defendant’s defenses, it is respectfully submitted that the Court correctly determined in response to the prior motion that such information and documents are relevant. It is further respectfully submitted that the present motion has also re-made that showing. 31. Defendant also argues that Atlantic fails to allege corporate status and asserts other allegations challenging the sufficiency of Atlantic’s pleadings and Atlantic’s standing to maintain 10 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 this lawsuit. However, since this is not a motion to dismiss (and, in fact, there is a separate motion to dismiss currently pending in which these issues are being addressed), the present motion is not the proper forum for those issues to be decided. Nonetheless, to the extent the Court may be inclined to address them, we refer the Court to [NYSCEF 85-121] refuting these arguments. 32. Defendant argues in bold lettering that Atlantic has not attached a copy of the subject insurance policies. However, the present motion is not a dispositive motion – Atlantic is not required to prove its case. Atlantic presented the affidavit of Suzanne Parrish in which she explains that the policies contain premium audit provisions and that the premiums at issue are audit premiums required under the policies. See, Parrish Affidavit, annexed as part of Exhibit 5 at ¶¶29- 33. Although Atlantic is not required to produce copies of the policies in connection with a discovery motion, particularly since the Court already previously found the documents to be relevant, nonetheless, copies were previously filed at [NYSCEF 58 and 59], which are incorporated herein by reference. 33. Defendant argues that “Plaintiff conflates initial premiums that are fully paid with premium audit endorsement language and contract provisions that plaintiff fails to plead.” Affirmation in Opposition [NYSCEF 179] at ¶4. Although the Complaint does not specify that the premiums sought were required as a result of an audit, the Complaint alleges that “the unpaid principal balance due on policy L146001424-1 is $69,903.09 [and t]he unpaid principal balance due on policy L146002524-2 is $23,238.00.” Complaint, annexed as part of Exhibit 1 at THIRD. The standard in New York is liberal notice pleading. (Artis v Random House, Inc., 34 Misc 3d 858, 866 [Sup Ct, NY County 2011]). The pleadings sufficiently allege Atlantic’s right to recover unpaid premiums. The fact that Atlantic does not specify in the complaint that the premiums were determined based upon an audit is irrelevant. As discussed above, for purposes of demonstrating 11 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 that documents relating to the audit, including Defendant’s financial records, are relevant to this lawsuit, Atlantic has attached the affidavit of Suzanne Parrish (Exhibit 1 at Exhibit O). 34. Since none of the arguments provide any basis for this Court to set aside its prior order compelling Defendant’s production, and since none of these arguments provide any reason for Defendant’s failure to comply with the Court’s order, it is respectfully submitted that this Court should grant Atlantic’s motion. APPROPRIATE REMEDY 35. Defendant does not refute that it has willfully failed and refused to comply with the Court’s order. Nor does Defendant refute that striking its pleading is the appropriate remedy. 36. The content of Defendant’s opposition demonstrates that, no matter how many orders this Court might issue compelling Defendant’s production, Defendant will continue in its refusal to comply. 37. In light of this, and since Defendant has provided none of the information or documents requested in this matter (save for one interrogatory response which Defendant contends is irrelevant), it is respectfully submitted that the appropriate remedy is to strike Defendant’s answer. 38. At a minimum, it is respectfully requested that this court preclude Defendant from denying Atlantic Casualty’s claims and/or preclude Defendant from contesting the fact that Defendant owes premiums, the amount sought, Defendant’s notice of the premiums, Defendant’s notice of the fact that the premiums remain outstanding and Plaintiff’s entitlement to the premiums sought herein. WHEREFORE, it is respectfully requested that this Court grant the within motion, together with such other and further relief as this Court deems just, equitable and proper. 12 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 Dated: White Plains, New York February 22, 2021 Keidel, Weldon & Cunningham, LLP By: ________________________________ Debra M. Krebs, Esq. Attorneys for Plaintiff Atlantic Casualty Insurance Co. 925 Westchester Avenue, Suite 400 White Plains, New York 10604 Tel: (914) 948-7000 Fax: (914) 948-7010 TO: L. Blake Morris, Esq. L. Blake Morris & Associates Attorneys for Defendant Eastern Fruit & Vegetables, Inc. 1214 Cortelyou Road Brooklyn, New York 11218 Tel: (718) 826-8401 13 FILED: KINGS COUNTY CLERK 03/11/2021 04:16 PM INDEX NO. 510798/2018 NYSCEF DOC. NO. 191 RECEIVED NYSCEF: 03/11/2021 WORD COUNT CERTIFICATION I hereby certify pursuant to 22 NYCRR 202.8-b that the total number of words in the foregoing Reply Affirmation in Further Support of Motion, inclusive of point headings and footnotes and exclusive of caption, signature blocks, and pages containing the table of contents, table of citations and this Statement is 3,726, which is in compliance with NYCRR 202.8-b. Dated: White Plains, New York February 22, 2021 KEIDEL, WELDON & CUNNINGHAM, LLP By: Debra M. Krebs, Esq. Robert W. Lewis, Esq. Attorneys for Plaintiff Atlantic Casualty Insurance Company 925 Westchester Avenue, Suite 400 White Plains, New York 10604 (914) 948-7000